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Retrain Your Brain When Investing Urges Investment Expert & Author
By: New Shelves Distribution
Cygan reveals why understanding how our brains are wired will better help us achieve our goals when investing, and stay the course instead of succumbing to market reversals.
There are many different parts of the brain, but two distinct parts are involved in financial decisions. The amygdala motivates us to seek rewards such as sex, money, alcohol, and drugs; it’s also responsible for impulsive behavior, anger, fear and greed—all enemies of a good investor.
The second part of our brain responsible for financial decisions is the prefrontal cortex, which is responsible for analytical thinking and emotional resilience—how slowly or quickly a person recovers from adversity.
Investors whose amygdala are more dominant are likely to make impulsive investment choices and be reactive to volatile market swings. When the stock market goes into a downward spiral they are likely to panic and sell their investments.
“These are very impulsive people who run for cover when the market drops 500 points and miss the rebound,” says Cygan. These are also the investors who follow the herd, are over-confident and are risk-takers when they pick a stock.
Investors whose prefrontal cortex is dominant tend to suffer from “analysis paralysis”. They analyze their investments so intensely that they cannot and do not act. Fear of being wrong further impedes them from pulling the trigger in what often would have been a profitable trade.
Wise investing involves using both parts of your brain. If you are an impulsive investor, you can retrain your brain to be more analytical and cautious. If you are over-analytical, you can retrain your brain to be less anxious, trust your gut and pay attention to your intuition.
In THE JOY OF FINANCIAL SECURITY, Cygan provides strategies for retraining your brain to neutralize the harmful emotional signals that motivate impulsive investors as well as happiness strategies and financial strategies so that investors’ money is aligned with their values.
Cgyan also explores how money affects our happiness and how knowing what makes you happy can help you make wise investments. “Although the concepts of happiness and money may seem miles apart, they have many parallels,” says Cygan. “To attain financial security, it is essential to know what makes you happy. Whereas money does not buy happiness, it certainly impacts our happiness,” she adds. Unlike other personal finance books, Cygan emphasizes the importance of determining what will make you happier, create a happier lifestyle as well as let you take control of your finances.
THE JOY OF FINANCIAL SECURITY includes cutting-edge research from the fields of neuroscience, behavioral finance, and economics. She provides readers with strategies for increasing net worth, controlling risk, minimizing taxes, and preparing for retirement. Readers learn how to protect themselves from the next economic downturn, how to avoid the pressure to “keep up with the Joneses,” and how to make smarter financial decisions. But she doesn’t stop there. She encourages readers to create happier lifestyles by making small changes that reap big rewards such as focusing on gratitude, nurturing creativity, and choosing experiences with family and friends instead of more “stuff”.
There are plenty of books that guarantee to make you rich. This is not one of them. Cygan’s goal in writing THE JOY OF FINANCIAL SECURITY is to provide readers with practical strategies for winning financial security and achieving personal fulfillment.
Donna Skeels Cygan, CFP, MBA has been recognized as one of the top financial advisors in the U.S., and has been quoted in many publications, including The Wall Street Journal, The New York Times, Forbes, Kiplinger’s, USA Today, Investment News, and Financial Advisor Magazine. She is the president of Sage Future Financial, LLC in Albuquerque, New Mexico and serves clients across the U.S. She and her husband are the proud parents of two daughters, Kate and Nora, and they have two cats and a dog.